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British euro forwarders fear worst from Brexit despite good trade today

BRITISH forwarders, who do much of their business on the continent, are increasingly uneasy about the uncertainty ahead caused by the vote to exit the European Union.

While the depressed state of sterling appears to be generating more business, these firms pay most bills in euros, reports Lloyd's Loading List.

UK-based European road freight forwarders fear currency volatility, further road freight rate rises and further costs and delays if the UK leaves the EU.

Tony Shally, managing director of European road freight specialist Espace Europe, said European road freight companies rely on the free movement of goods within Europe and a strong pound to keep haulage costs down.

"We have weathered a difficult five months and still hit our targets, but I know there are tough times ahead," he told Lloyd's Loading List.

"Customers have told us that they have been getting more enquiries from their European customers and from new prospective customers. They sent out a lot of quotes and have seen some small short-term increases in export business," Mr Shally said.

"In the five months since Brexit, we have seen a seven per cent increase in export shipment numbers compared to the five months before Brexit. There has been a very small fall in import shipment numbers. We are mostly export driven."

But the cost implications had been significant.

"As we pay over half our suppliers in euros, we have seen our European haulage costs rise dramatically due to the 10 per cent reduction in the value of the pound against the euro," Mr Shally said.

"Some of our customers have agreed to pay us in euros, but most don't hold an excess of euros each month, so have asked to stay with a sterling charge."

"It has even worse for our import customers. Their goods are costing them 10 per cent more now to import and we are asking them for increases to cover the increases in our import haulage costs.

With import charges double or even triple the export cost, these surcharges can mount into the GBP100 (US$126) per import fullload.

The pound's volatility remains a big concern. "With growing concerns about what might happen and no clear Brexit plan five months on, I can only see the pound plummeting further in value," he said.

"Freight rates will shoot up again, customers who once valued service over price may be forced to buy solely on price, cutting out companies like Espace who sell on value-added," he said.